IRD ASSIGNMENT

Ques. 1) Perform a SWOT Analysis of Indias economic situation vis--vis the turmoil in major global economy. What reforms do you
think are necessary for in (max 1 page)
a. Fiscal Policy of the country (max 1 page)
b. Monetary Policy of the country (max 1 page)
In order to achieve 8% of growth in GDP by 2017.
Support your answer with relevant data.

Swot analysis

REFORMS NEEDED IN FISCAL POLICY OF THE

COUNTRY
The Indian economy is reviving, helped by positive policy actions that have improved confidence and by lower global oil prices.
India needs some reforms. The Indian economy is the bright spot in the global landscape, becoming one of the fastest-growing
big emerging market economies in the world.
Growth numbers are now much higher and the current account deficit is comfortable, in part due to the fall in gold imports and
lower oil prices. New investment project announcements have started to pick up, particularly in the power and transport sectors.
Financial sector health and further financial inclusion would support growth going forward. While the country is well placed to
cope with external shocks, there are possible risks on the horizon, both external and domestic. Spillovers from weak global
growth and potential global financial market volatility could be disruptive, including from any unexpected developments as the
United States begins to raise its interest rates.
Growth forecasts higher: - Based on this revised GDP, the IMF forecasts growth will strengthen to 7.2 percent in 2014/15 and
rise to 7.5 percent in 2015/16, driven by stronger investment following improvements to the business climate. The revised
growth figures support our view that economic recovery in India is under way, albeit pointing to a somewhat faster pace than we,
and others, previously believed. These GDP revisions portray a more resilient performance of the services and manufacturing
sectors of the economy. But while public and private consumption look stronger, investment activity continues to be held back
by structural and supply-side constraints.
Inflation declining:-Inflation has fallen by half to around 5 percent, after hovering around 10 percent for several years. The
report commended the Reserve Bank of India (RBI) for its steps to tighten monetary policy by raising interest rates during 2013
2014, as well as the governments efforts to contain food inflation, including by releasing buffer stocks of cereal and keeping
agricultural procurement prices in check.
More solid fiscal footing:-The government has made strong efforts to put its public finances on solid footing, with the central
governments fiscal deficit falling to 4.1 percent of GDP in 2014/15, helped by lower oil prices. By creating space for higher
infrastructure spending, fiscal reforms can have a major impact on economic growth. The government has recently
deregulated diesel prices and raised natural gas prices. The report suggests, however, that tax revenues can be increased,
including through better tax administration, and spending controlled through further streamlining of subsidies. In addition,
boosting spending on infrastructure, such as roads and ports, electricity transmission, and social spending (public health,
education) would improve the quality of expenditure. A national goods and services tax would also help create a single Indian
market by replacing a myriad of local levies. Direct cash transfer payments helped by Indias unique identification system
(Aadhaar)in place of existing subsidies would help better targeting of subsidies (which can have large leakages) toward the
vulnerable.
Reforms Toward a brighter economic picture

The introduction of the GST and expanding direct benefit transfers can be game-changers.

Deregulation of diesel prices, direct transfer of cooking gas subsidy, hiking FDI cap in defence and insurance,
Ordinance on Coal.

India should enhance financial sector regulation and efforts should be made to recover bad loans in the banking sector.

India needs to priorities market-based pricing of natural resources and address delays in implementation of
infrastructure projects.

Addressing bottlenecks in the energy, mining and power sectors;

Increasing investment to help close Indias major infrastructure gaps;

Taking further steps to simplify and expedite the process of acquiring land and obtaining environmental clearances;

Reforming the agriculture sector to ensure greater efficiencies in the public system for food procurement, distribution,
and storage;

Making labour markets more flexible, to encourage young job-seekers and boost presently low female labour force
participation;

Improving education to meet rising shortages of skilled labor.

Need national common market for farm goods.

Need law amendment for trading in some agri commodities.

Must remove market access barriers to boost services sector.

Must boost capital market, bond financing going forward.

Also need to rationalize subsidies to free resources.

Need to target beneficiaries better to free resources.

Ending, phasing out subsidy not feasible, nor desirable.

Enhanced revenue generation remains govt priority.

Must scrap some norm to realize potential of services sector.

Stalling of projects seems to have plateaued.

REFORMS NEEDED IN MONETARY POLICY

Growth

is basically related with the inflation rate of the country. As talked about monetary policy reforms. Higher GDP can be

attain by simply change in monetary policy. But our RBI governor MR. Raghuram rajan had different view on it. That monetary
policy is already good enough for our country and we need reforms in govt. policy. By decreasing interest rates RBI can
increase the inflation rate which can further increase the growth rate but this decision is not ok for long term according to our
RBI governor. Below is an explanation

EXPLANATION

Reserve Bank Governor Raghuram Rajan said the country cannot have a GDP growth of 8 per cent until it makes "tremendous
investments" and improves supply situation that boosts demand, but warned against populist policies. To a query on whether
the country can have much higher levels of growth without inflation, The answer is no. We have to create underlying supply
conditions that would allow us to sort of have a much higher demand.
To achieve 8 per cent growth, there is a need for large investments which could lead to higher demand.8 per cent growth as a

situation where we are investing tremendous amount and thus creating the supply which will then help the demand. So, what
we need to do is not just boost demand but we need to boost supply also, which means a lot of work on a number of fronts
which currently the government is engaged in.
However that reaching 8 per cent growth rate is a steady process and cannot be attained overnight.
That the 9 per cent growth is certainly an aspiration we should have but we need to eliminate the supply constraints, including
our human capital. There is a need to improve the quality of human capital in the country. On the G20 grouping, Dr Rajan said,
India does not have many good economists who could represent the country in various international fora and working groups.
The G20 framework working group is supposed to be co-chaired by Canada and India. Canada has seven strong economists
working on this group and trying to further the agenda while India brings fewer people to the table because we don't have that
strength in the number of economists that we can actually contribute.
The government's flagship 'Make in India' programme can be successful by creating transparent taxation system and by
building business-friendly environment.
One of our solutions of problem of employment was to create small scale industry but they got decimated by competition from
elsewhere. It would have been better if we would have allowed large scale industry in those places. They would have employed
far more.

Ques. 2) What do you think are the Top 5 mutual fund investment opportunities available in the country right now? What are the
asset allocations of these mutual funds? Which underlined assets do you think should be taken out & which one should be
introduced in order to achieve a better growth in investment in these mutual funds.
Perform this analysis for
a) Debt only mutual funds (max 1 page)
b) Blue-chip equity mutual fund (max 1 page)
c) Growth Fund

1) Top 5 Growth mutual funds opportunities available in India are:1)

Birla Sun Life Top 100 Fund

2)

Franklin India Opportunities Fund

3)

JPMorgan India Mid and Small Cap Fund

4)

Canara Robeco Emerging Equities

5)

Birla Sun Life India GenNext Fund

Asset Allocation of these mutual fund companies are:-

1)

Birla Sun Life Top 100 Fund

Asset Allocation (%)

Equity

95.82

Others

2.87

Debt

0.08

Mutual Funds

N.A

Money Market

0.00

Cash / Call

1.22

2)

Franklin India Opportunities Fund

Asset Allocation (%)

Equity

92.01

Others

0.00

Debt

0.00

Mutual Funds

N.A

Money Market

0.00

Cash / Call

8.01

3)

Canara Robeco Emerging Equities

Asset Allocation (%)

Equity

94.78

Others

0.00

Debt

0.00

Mutual Funds

N.A

Money Market

3.85

Cash / Call

1.37

4)

JPMorgan India Mid and Small Cap Fund

Asset Allocation (%)

Equity

95.35

Others

0.00

Debt

0.02

Mutual Funds

N.A

Money Market

0.00

Cash / Call

4.63

5)

Birla Sun Life India GenNext Fund

Asset Allocation (%)(Sep 30, 15)

Equity

90.93

Others

0.22

Debt

0.00

Mutual Funds

N.A

Money Market

0.00

Cash / Call

8.86

2) Top 5 Blue Chip equity mutual funds opportunities available in India are:

1)

Principal Emerging Blue-chip Fund

SBI Blue Chip Fund
ICICI Prudential Focused Blue-chip Equity Fund

Principal Emerging Blue-chip Fund

Asset Allocation (%)

Equity

96.83

Others

0.99

Debt

0.00

Mutual Funds

0.15

Money Market

0.00

Cash / Call

2.03

2)

SBI Blue Chip Fund

Asset Allocation (%)

Equity

89.70

Others

1.36

Debt

0.00

Mutual Funds

N.A

Money Market

12.12

Cash / Call

-3.18

3)

ICICI Prudential Focused Blue-chip Equity Fund

Asset Allocation (%)

Equity

93.87

Others

2.50

Debt

0.58

Mutual Funds

0.27

Money Market

0.00

Cash / Call

2.78

3) Top 5 Debt ONLY mutual funds opportunities available in India are:

DWS Banking & PSU Debt Fund - Regular Plan

BNP Paribas Flexi Debt Fund - Regular Plan
HDFC High Interest Fund - Dynamic Plan
Tata Dynamic Bond Fund - Regular Plan
HDFC Short Term Opportunities Fund

1)

DWS Banking & PSU Debt Fund - Regular Plan

Asset Allocation (%)

Equity

0.00

Others

0.00

Debt

98.66

Mutual Funds

N.A

Money Market

0.00

Cash / Call

1.34

2)

BNP Paribas Flexi Debt Fund - Regular Plan

Asset Allocation (%)

Equity

0.00

Others

0.00

Debt

81.38

Mutual Funds

2.63

Money Market

6.21

Cash / Call

9.78

3)

HDFC High Interest Fund - Dynamic Plan

Asset Allocation (%)

Equity

0.00

Others

0.00

Debt

96.42

Mutual Funds

N.A

Money Market

0.00

Cash / Call

3.58

4)

Tata Dynamic Bond Fund - Regular Plan

Asset Allocation (%)

Equity

0.00

Others

0.00

Debt

92.06

Mutual Funds

N.A

Money Market

0.00

Cash / Call

7.95

5)

HDFC Short Term Opportunities Fund

Asset Allocation (%)

Equity

0.00

Others

0.00

Debt

84.79

Mutual Funds

N.A

Money Market

11.38

Cash / Call

3.83